Question

dwight donovan, the president of rundle enterprises, is considering two investment opportunities. because of limited resources, he will be able to invest in only one of them. project a is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of three years and no salvage value. project b supports a training program that will improve the skills of employees operating the current equipment. initial cash expenditures for project a are $104,000 and for project b are $34,000. the annual expected cash inflows are $41,086 for project a and $14,156 for project b. both investments are expected to provide cash flow benefits for the next three years. rundle enterprises’ desired rate of return is 6 percent. (pv of $1 and pva of $1) (use appropriate factor(s) from the tables provided.)